Trying times ahead for service provider industry: Cisco Malaysia

KUALA LUMPUR, 3 MARCH 2010 -- The service provider industry is facing a challenging phase of rapid transition, according to networking provider Cisco Malaysia.

"These are especially trying times for service providers [SP], said Cisco managing director, service provider, Internet business solutions group (ISBG), Stuart Taylor, during a tour, which included Kuala Lumpur.

"In most countries, the rapid increase in broadband connectivity, digital content, and mobile data has led to the proliferation of Web 2.0 applications and services, which has resulted in a massive explosion of data and user demand," said Taylor.

"In addition, the SP industry is in rapid transition due in part to economic uncertainty around the globe, changing technologies as well as the aforementioned massive rise in network traffic," he said, adding that Cisco estimates that mobile data traffic would double every year for the next five years."

"There are 16 different drivers shaping the future of the service provider industry, grouped into four major categories: business environment, regulation, technology, and customer behaviour," said Taylor. "Overall, the industry currently generates more than US$3 trillion in annual revenue globally and is expected to become a US$5.5 trillion industry by 2015."

"In Malaysia, broadband and mobile connectivity is becoming more of a reality, said Taylor, adding that the Malaysian government's drive to achieve 50 per cent broadband penetration rate by the end of 2010 seemed to be on track.

"Broadband is seen as an economic platform," said Taylor. "Emerging markets such as India and China have also been quick to adopt mobile broadband connectivity through smart phones."

Handling of different data

"The network platform needs to deal with the massive increase in data while using a green approach in order to meet the rising demand from social factors as well as from regulators," he said.

"Many SPs can strategically position themselves as gilded cages [operating in a 'closed' world] by offering network quality and value-added services," said Taylor. "However, many SPs are learning to team up with over-the-top collaborators such Google, or YouTube."

"Another parallel solution is to develop different levels of service for various levels of data, which would require better analysis and management of network traffic," he said. "Two-thirds of traffic will be video data that must be met with intelligent handling of different data across networks: this means data centres and networks need to work even more closely together with an open standards-based approach."